How to save money with a hot water heat pump

After 15 Years of inner city living, we moved to Como in the Sutherland Shire last year. We were used to low electricity bills in our apartments, of around $150 per quarter which is around 6-7 Kilowatt-hours (kWh) per day. We were shocked when I checked our meter a couple of weeks in to see we were now using 30 kWh per day. Eeek!

Granted, we used to get our hot water, cooking and heating with gas, so our previous low figure was just for lights, refrigeration and appliances. But it shocked us into action, and we immediately disconnected half of the 72 down lights! Coming out of winter, we saw our consumption drop down to around 16 kWh per day, which was much better.

For the purposes of tracking our energy use, we luckily have our hot water supplied on a different meter. It is on an off-peak service which is controlled by the local network company Ausgrid, and only turns on at night. This is to ensure household hot water does not cause network peak demand, and also helps coal fired generators keep going overnight as they are unable to (cost effectively) switch off and back on each day.

We measured that of our 16 kWh per day, our electric element hot water tank system used 6-8 kWh per day. Almost half! I had heard of electric hot water heat pumps, and started researching them. Our action was brought forward when the hot water failed.

I order a heat pump and new tank from a supplier I know, and contacted the local plumber to arrange installation.

The (approximate) costs:

  • New tank – $1,000
  • Heat Pump – $2,200
  • Installation – $800
  • Government Rebate – $1,000

The picture above shows what it looks like, with the heat pump in the foreground and the tank behind it.

I think the net additional cost of choosing a heat pump was approximately $2,500, after the rebate. The $1,000 to $1,200 rebate is from the Federal Government as part of the Renewable Energy Target. Why?

Heat pumps are just a pump. They don’t heat the water directly. They absorb heat energy from the ambient outdoor air, and use pressure and refrigerant and transfer the heat into the water. This is very efficient using around 75% less electricity compared to an electric element hot water. As the majority of the energy comes from ambient air heat, which is powered by the sun, it is 75% renewable.

The Results?

Our hot water heating now only uses around 2 kWh per day. So about a 75% saving as expected. In the graph below, you case see our hot water electricity usage and general power usage over time. You can see the few days we went without hot water as our system failed and we organized the new tank and heat pump, but more importantly, you can see the reduction in electricity use.

We buy Greenpower using Powershop, which is around 30 cents per kWh. So this saves us $1.80 per day, or $550 per year. It runs well and we are happy with the investment.

Other considerations

The heat pump fan does make some noise. Ours currently runs at night, and I don’t think it is noisy enough to bother anyone, but we are getting solar soon so will switch it to the general circuit and program the heat pump to run from 10am each day. So a little noise certainly won’t be a problem in the middle of the day.

We got a Siddons bolt on heat pump as it is what the company I knew supplied. Sandon Heat Pumps are the most popular from what I can gather in Australia, and are reputed to be very efficient and quiet. While efficiency is important, heat pumps are already very efficient compared to electric element heating. It doesn’t really matter too much if it is using 2.1 kWh per day rather than 2kWh per day (a 5% difference).

Update: Now we 100% have solar power hot water!

We now have 7.8kw of Solar on our rooftop. See more info on the solar system here

We have moved the heat pump off our dediated contolled load circuit, onto the main circuit. I have set it to come on at 11am each day. It comes on for 2 hours each day, and uses 2-2.5 kWh per day. The image below shows it as it comes on in blue, utilising our solar.

Heat pumps vs evacuated tubes or solar thermal hot water?

Most people know solar hot water as rooftop thermal systems, like evacuated tubes or plates. These are attractive as they require no power for much of the year, they are 100% powered by the sun, when it is warm and sunny. From what I understand, they are $4,000 to $5,000 to install, so more expensive than heat pumps.

In comparison, heat pumps use 2kWh per day of electricity. The easiest way to compare, is to consider that 0.5kW of solar makes 2kWh per day in Sydney, so just by adding 1-2 extra solar pv panels, you have more than offset your electricity use. Extra solar pv takes up little space, and i think rooftop solar hot water is not the best use of rooftop real estate. Solar PV is better can be used for many more purposes.

Why doesn’t everyone have a heat pump?

For environmental and financial reasons, I am surprised heat pumps are not more popular. There are a few reasons I have identified:

  • General lack of knowledge about them and the benefits
  • The higher up front cost
  • Plumbers and suppliers are more familiar with electric element heaters, so do not normally recommend heat pumps
  • People often get hot water systems installed in a hurry, as their previous system has failed, and plumbers have electric elements in stock, but would have to order in a heat pump which takes time
  • Solar and batteries are currently more fashionable, and people love showing them off, but heat pumps are a bit boring in comparison

Are you interested in switching to a heat pump or would like more information? Or do you have your own experience or story with heat pumps? We’d love to hear from you. Send an email to

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